Este informe no está disponible en español.


Federal funds to Puerto Rico show little growth in recent years; Island receives less per capita than Guam, U.S. Virgin Islands, and all 50 states

by Ivonne Garcia

March 16, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.

As federal funding is used as a political football in the ongoing tussle over Vieques, Puerto Rico lags behind smaller U.S. territories in per capita federal expenditures. Plus, the growth of federal outlays here has actually slowed in recent years, starting long before the latest controversy over the island municipality erupted.

U.S. Census Bureau data show that federal per capita spending of $2,880.56 for Puerto Rico's 3.86 million inhabitants in fiscal 1998 was much lower than in any of the 50 states. Furthermore, Puerto Rico's per capita expenditures were less than those of smaller U.S. territories.
In Guam, with 149,000 people, the U.S. government spent $6,694.91 per capita in fiscal 1998. In the neighboring U.S. Virgin Islands, the per capita expense on the 118,000 residents was $4,088.09. The expenditure on the 62,000 people of American Samoa was $2,183.15, only slightly less than Puerto Rico. In the Northern Marianas, the United States spent $945.72 per capita on its 67,000 people, according to Census data.
Except for American Samoa, whose residents are U.S. nationals, the inhabitants of the other so-called "insular areas" also are U.S. citizens, like Puerto Ricans.

In Guam, where the United States has large military bases, 51% of the per capita amount was made up of procurement contracts and federal salaries and wages. In the U.S.V.I., 53% of the per capita amount was comprised by grants, which include Medicaid and family support payments. Procurement contracts and salaries and wages represented only 10% of Puerto Rico's per capita amount, and grants 35%, according to Census data.

Puerto Rico treated differently

Unlike other U.S. territories, which receive full food-stamp funding, Puerto Rico's Nutritional Assistance Program (known as PAN for its Spanish acronym) is funded at about 67% of that level. Also, while the other territories receive full Medicare funding, Puerto Rico's is based on a special limited formula. Likewise, unlike other territories, Puerto Rico does not receive full federal funding for needy children in elementary and secondary schools. All territories are capped on Medicaid money and only Northern Marianas residents receive Supplemental Security Income, according to federal officials.

Meanwhile, up to 58% of Puerto Ricans can be termed as needy for federal purposes, and while up to 65% of islanders would qualify for food stamps, the percentage that qualifies stateside is closer to 11%. According to White House Interagency Working Group on Puerto Rico Co-Chairman Jeffrey Farrow--the president's main adviser on local issues--44% of the island's population is eligible for PAN.

"Sometimes the [smaller population] territories end up being treated equally with the states because it costs less," Farrow added.

Growth of federal funding

One way or another, the growth of federal funding to Puerto Rico has actually diminished in the past few years from a growth rate of almost 8% in fiscal 1995, to 4% in fiscal 1996, 3.6% in fiscal 1997, and 3.2% in fiscal 1998, Census records indicate.

The issue of federal funding has taken center stage again over recent events in Vieques. Some U.S. Congress members have questioned whether the nearly 4 million U.S. citizens in Puerto Rico should receive current levels of federal outlays--or any additional funds--given widespread opposition to the U.S. Navy's permanence on the island municipality.

Rep. Tillie Fowler (R-Fla.) has said no more money should be appropriated to the Roosevelt Roads Naval Base in Ceiba. "If the Puerto Ricans don't want to participate in the price of freedom, then they can't participate in the benefits either," Fowler has said.

Still, many U.S. officials agree that there is no danger to the current lion's share of the money funneled to the island for federal programs and defense. In the Republican-dominated Congress, the bone of contention would be any additional funds requested, such as President Clinton's proposal to extend the life of the Internal Revenue Code's Section 30A wage credit until 2009, which would cost the U.S. Treasury an additional $10 billion or so in lost revenues.

"Most of what we deal with of the budget is not thought about by most people in policy-making positions every year," said Farrow. "We think about what's new, what changes are needed. Most of what [is funded now] is on automatic pilot."

Fiscal Year 1998

In fiscal 1998, Puerto Rico received more than $11.1 billion in federal outlays, including defense expenses. Some $4 billion, or 36%, went to retirement and disability payments in programs such as Social Security and veterans benefits. The people who receive those benefits paid into those programs.

Another 35%, or some $3.9 billion, was allocated in grants for highways, family support payments and Medicaid, among others, while some $2.1 billion, or 19%, went to other direct payments, including Medicare, unemployment benefits, and Section 8 subsidized housing. About 7%, or $739 million, was assigned to salaries and wages of federal employees on the island, while $374 million, or 3%, was given in procurement contracts.

Fiscal 1999 numbers are currently being compiled and will be released later this year by the U.S. Census Bureau's Federal Programs Branch. The federal fiscal year runs from Oct. 1 to Sept. 30.

Areas that saw decreases in fiscal 1998 included federal unemployment benefits, which dropped 7% from fiscal 1997 levels to $281.7 million. Veteran's benefits also edged down by 2% to $343 million, according to Census numbers.

Edging way up were Medicaid funds, which more than doubled in fiscal 1998 to $176.7 million. Medicare funds also grew about 2% to $1.1 billion while the Aid for Dependent Children Program more than doubled to $113.4 million from fiscal 1997 levels. Also expanding by 17% were retirement and disability benefits, which grew to $227 million in fiscal 1998 from the previous year's levels. Highway planning and construction funds also more than doubled to almost $14 million from about $6 million in fiscal 1997, Census data show.

"President Clinton has worked to raise funds for Medicare, Medicaid and in the Elementary and Secondary Act for Needy Children," Farrow said, noting that the president has proposed equal treatment for Puerto Rico in several programs, but the Republican Congress has whittled down his proposals.

Meanwhile, defense expenses in Puerto Rico also grew 9% from fiscal 1997 to fiscal 1998, totaling $600.9 million and representing about 5% of the 1998 total. The military presence on the island has increased significantly with the relocation of the U.S. Army South facilities to Fort Buchanan in Guaynabo.

The largest single outlay in federal grants in 1998 were to the PAN, Puerto Rico's version of the Food Stamps Program, with $1.2 billion. Other significant outlays included some $2.7 billion in Social Security disability and retirement insurance payments. Another $2.3 billion was provided for flood insurance, Census data show.

Puerto Rico's slice

As it is, Puerto Rico's slice of the U.S.-wide budget pie has remained unchanged at 0.7%, placing it at par with West Virginia and higher than states such as Utah and Hawaii.

But while West Virginia (0.7%), Utah (0.8%) and Hawaii (0.4%) each represents less than 1% of the U.S. total population, Puerto Rico holds 1.4%. A comparable state, Kentucky, with 1.5% of the U.S. population, receives more than double, or 1.6%, of the federal expenditures tart, according to Census data. This all goes to show that Puerto Rico receives less federal funds per capita.

Of the $11.1 billion that Puerto Rico received in fiscal 1998, $5.1 billion was spent on San Juan, $319.5 million in Bayamon, $292.7 million in Adjuntas, $284.7 million in Ponce and $274.3 million in Las Piedras, representing the municipalities with the highest federal allocations.

The smallest federal outlay went to Culebra, with 1,738 people, where the federal government spent about $1.6 million. In Vieques, the U.S. government spent $14.2 million.

President Clinton has proposed a $40 million aid package for Vieques as part of his directives on the future of the Navy there. The money--approved by a House committee last week--would go to economic development programs, including creation of new fishing grounds, per diem compensation to fishermen when they're kept from pursuing their livelihood and a job-training program for Vieques youth.

Clinton also has mandated a referendum in which Vieques residents would choose whether the Navy gets to stay until May 1, 2003 with limited training, or remains indefinitely under terms they will propose.

This Caribbean Business article appears courtesy of Casiano Communications.
For further information please contact

Self-Determination Legislation | Puerto Rico Herald Home
Newsstand | Puerto Rico | U.S. Government | Archives
Search | Mailing List | Contact Us | Feedback